Creating better jobs

What makes a good job?

Most people would agree a good job is about more than the hourly rate. Three things matter most.

That last point matters more than it might seem. Labour productivity means how much a worker produces in an hour. Over the long run, pay tends to follow it. Since the 2008 financial crisis, UK productivity has grown slowly [1], and real wages barely changed for more than a decade. [2]

Where work falls short

Problems in today's jobs market usually fall into three groups.

What's already changing?

The Employment Rights Act became law in December 2025, and its changes are being introduced in stages during 2026 and 2027. [5] They include:

• A Fair Work Agency, a single body to enforce the minimum wage, holiday pay and sick pay.
• Guaranteed hours, giving zero-hours workers the right to a contract that reflects the hours they regularly work, plus reasonable notice of shifts.
• Sick pay from the first day of illness, rather than the fourth. [6]
• A Fair Pay Agreement for adult social care, setting minimum pay and conditions across the whole sector.
• Limits on "fire and rehire", where staff are dismissed and offered their jobs back on worse terms.

Many of the details are still being worked out, so how far these changes go will depend on the final rules and how well they are enforced.

What can government do?

Government has three broad ways to shape the jobs market.

Setting the rules

These are the regulations that come up most often in the debate.

1. Raise the minimum wage

   The idea

   Keep raising the legal minimum wage, perhaps to match the "real Living Wage", which is calculated from what it actually costs to live. [7]

   Why it might help

   It directly lifts the pay of the lowest paid. Since it began in 1999, the minimum wage has risen substantially without the large job losses many predicted. [8]

   The hard question

   How high can it go before smaller firms cut hours, jobs or investment, especially in parts of the country where wages are lower?

2. Guarantee hours and fair notice

   The idea

   Give people on zero-hours or low-hours contracts the right to a contract matching the hours they actually work, with notice of shifts and pay for cancelled ones.

   Why it might help

   People can plan their lives, budget properly, and get a mortgage or tenancy.

   The hard question

   Some people, such as students and carers, value flexible hours. How do you protect workers without removing that choice?

3. Make employment status clearer

   The idea

   Simplify the rules on who counts as an employee, a worker or self-employed.

   Why it might help

   It stops companies classing people as self-employed to avoid paying the minimum wage, holiday pay or sick pay.

   The hard question

   Where should the line fall for genuine freelancers and gig workers who want to stay independent?

4. Agree pay across whole sectors

   The idea

   Through collective bargaining, employers and unions agree minimum pay and conditions for an entire sector, such as social care or hospitality.

   Why it might help

   In low-paid sectors, individual workers have little bargaining power, and good employers get undercut by bad ones. Union membership has roughly halved since its peak in 1979. [9]

   The hard question

   Could one deal for a whole sector raise costs too far for small or struggling businesses?

Rights only matter if they're enforced

Employment rights have often been ignored or worked around. These cases show why enforcement is just as important as the rules themselves.

Government as employer and buyer

Government doesn't just make the rules. It also creates and pays for millions of jobs.

1. Set the standard as an employer

   Around 6.2 million people, roughly 18% of all UK workers, are employed in the public sector, in places like the NHS, schools and councils. [13] The pay and conditions offered there affect what private employers must offer to compete for the same staff.

2. Use public spending power

   Government spends hundreds of billions of pounds a year buying goods and services. It could require suppliers to pay the real Living Wage, offer guaranteed hours or recognise unions, using its buying power to raise standards across the economy.

   The trade-off is that contracts could cost more, and smaller firms might find it harder to bid.

3. Create jobs through public investment

   Building homes, insulating buildings, expanding clean energy and staffing social care all create jobs directly, while tackling problems that need solving anyway.

   The challenge is paying for it, and finding enough people with the right skills.

4. A job guarantee

   Government guarantees a paid job, doing useful work, to anyone who wants one but can't find one.

   The UK has tried smaller versions. The Future Jobs Fund (2009 to 2011) and Kickstart (2020 to 2022) paid for job placements for young people out of work. Results were mixed, and critics question whether such jobs lead to lasting work or simply replace jobs that would have existed anyway. [14]

Investing in skills and growth

Some of the most important steps aren't about employment law at all.

What are the challenges?

1. Costs for small businesses

   The problem

   Higher wages and new rights add costs, and small firms with tight margins feel them most.

   A possible fix

   Phase changes in gradually, give clear guidance, and offer targeted support such as tax relief for small employers.

2. Fewer jobs or hours

   The problem

   If staff become too expensive, businesses may hire fewer people, cut hours or replace workers with machines.

   A possible fix

   Base increases on independent evidence, as the Low Pay Commission already does for the minimum wage, and monitor the effects closely.

3. Losing flexibility

   The problem

   Some people choose flexible work because it suits their lives, and strict rules could take that option away.

   A possible fix

   Give workers the right to guaranteed hours rather than banning flexible contracts outright, so the choice is theirs.

4. Rules that aren't enforced

   The problem

   When enforcement is underfunded, rights exist on paper only, and the workers with least power lose out most.

   A possible fix

   A well-funded enforcement body with the power to inspect and fine, such as the new Fair Work Agency.

5. The cost to the public purse

   The problem

   Public jobs, investment and training schemes all cost money.

   A possible fix

   Target spending where the evidence is strongest, and look at how it's funded. Our Taxing wealth and income fairly explainer looks at some of the options.

6. Results take time

   The problem

   Skills and productivity improve slowly, often over longer than a single parliament, so short-term politics can get in the way.

   A possible fix

   Long-term plans with cross-party support, and independent bodies to track progress.

The arguments at a glance

Sources and further reading

These sources support the facts and examples on this page. They explain the evidence and the policy options, but they don't all endorse the ideas discussed here.

1. Resolution Foundation and LSE Centre for Economic Performance: Ending Stagnation (2023) — slow UK productivity growth and decades of low investment.
2. Resolution Foundation: 15 years of economic stagnation has left workers with an £11,000 a year lost wages gap (2023) — how real pay stalled after 2008.
3. Office for National Statistics: People in employment on zero-hours contracts (EMP17) — official estimates of zero-hours working.
4. Joseph Rowntree Foundation: UK Poverty 2026 — in-work poverty and the depth of poverty in the UK.
5. Greenberg Traurig: UK Employment Rights Act 2025 – key reforms and timeline — what the Act covers and when it became law.
6. GOV.UK: Roadmap unveiled to boost rights for half of all UK workers — when sick pay changes, the Fair Work Agency and other measures take effect.
7. Resolution Foundation: Calculating the Real Living Wage for London and the rest of the UK — how the voluntary Real Living Wage is calculated from living costs.
8. GOV.UK: Impacts of minimum wages – review of the international evidence (2019) — evidence on how minimum wages affect jobs and pay.
9. Department for Business and Trade: Trade union membership statistics — membership trends since the 1979 peak.
10. GOV.UK: Over 500 companies named for not paying minimum wage (2024) — the government's naming scheme for minimum wage underpayment.
11. UK Supreme Court: Uber BV v Aslam [2021] UKSC 5 — the ruling that Uber drivers are workers.
12. ITV News: Government ends contract with P&O Ferries over sackings (2022) — the dismissal of 786 seafarers without notice.
13. Office for National Statistics: Public sector employment, UK: June 2026 — how many people work in the public sector.
14. National Audit Office: Employment support – the Kickstart Scheme (2021) — what Kickstart achieved, the questions over its impact, and how it built on the Future Jobs Fund.